ASSEMBLY BIOSCIENCES INC

The following table shows the total compensation earned by the NEOs in the last two fiscal years (or such shorter period during which the individual was an NEO). All share numbers have been equitably adjusted in connection with our February 2024 1-for-12 reverse stock split.

(1)

The reported amounts represent the grant date fair value of the award, computed in accordance with FASB ASC Topic 718 disregarding any estimated forfeitures related to service-based vesting; performance awards are valued based upon the probable outcome of the performance conditions. Assumptions used in the calculation of these amounts are included in Note 9 of the consolidated financial statements included in our Annual Report on Form 10‑K for the year ended December 31, 2023.

(2)

Non‑equity incentive plan compensation represents amounts earned as annual performance-based cash bonuses based on the achievement of Company-wide and individual performance goals and other factors deemed relevant by the Compensation Committee for the year indicated. For more information regarding the calculation of annual performance based cash bonuses, see “—Annual Performance-Based Cash Bonus.”

(3)

“All Other Compensation” represents 401(k) matching contributions made by the Company and premiums paid for group term life insurance coverage greater than $50,000.

Narrative Disclosure to Summary Compensation Table

The three principal components of our executive compensation program are base salary, annual performance-based cash bonus and long‑term equity incentive awards. Our Compensation Committee believes that each component of executive compensation must be evaluated and determined with reference to competitive market data, individual and Company-wide performance, our recruiting and retention goals, internal equity and consistency, and other information that the Committee deems relevant. The Compensation Committee believes that in the biotech industry, stock option and/or other equity awards are a primary motivator in attracting and retaining executives, in addition to salary and cash incentive bonuses.

The primary components of our compensation packages are described in more detail below.

Base Salary

Base salaries provide financial stability and security to our NEOs by providing a fixed amount of cash for performing their job responsibilities. Our NEOs’ base salaries are established based on each NEO’s position, criticality and scope of responsibilities, prior experience and training, then-current compensation levels and competitive market-based compensation data we review for similar positions in our industry. Base salaries are reviewed periodically and may be increased for merit reasons based on the executive’s performance, for retention reasons or if the base salary is not competitive with salaries paid by comparative companies for similar positions. Additionally, we may adjust base salaries throughout the year for promotions or other changes in the scope or breadth of an executive’s role or responsibilities. The NEOs’ annualized base salaries for 2022 and 2023, effective as of February 16 of each year or as otherwise noted, were as follows:

(1)

On January 1, 2023, Mr. Okazaki’s salary was increased from $575,000 to $600,000 in connection with his promotion to Chief Executive Officer and President.

(2)

In 2023, the Compensation Committee elected not to increase base salary for either Dr. Delaney or Dr. White, instead making salary increases for both contingent on a capital raise that would extend our cash runway into 2025. The Gilead collaboration, entered into in October 2023, met this goal, but rather than increasing base salaries in late 2023, the Compensation Committee decided to wait until 2024 to adjust the base salaries of Dr. Delaney and Dr. White, effective as of January 1, 2024.

Annual Performance-Based Cash Bonus

Our employees, including our NEOs, are eligible to earn annual performance‑based cash bonuses to reward strong performance and encourage retention in our sector’s competitive labor market. We pay these bonuses to motivate and reward our employees for achieving or exceeding our shorter-term corporate goals, which are each designed to be measured over a calendar year.

Annual performance-based cash bonuses are earned based on the achievement of significant pre-set, objective Company-wide goals weighted to reflect their relative importance to the achievement of our goals, with specific goals tailored to the NEOs’ areas of responsibility. These performance goals are pre-set by our Compensation Committee in the first quarter of the applicable calendar year and approved by the Board. Actual bonus amounts earned are determined in the first quarter of the following year based on achievement of the pre-set Company-wide goals and, for employees other than our Chief Executive Officer, individual performance objectives set by our employees, including our NEOs other than the Chief Executive Officer, in consultation with their managers, which may include certain department, group or team objectives applicable to these employees. The Compensation Committee may increase or decrease an NEO’s bonus payment (above or below the target percentage) based on its assessment of our Company-wide performance and that NEO’s individual performance during a given year. For 2023, annual bonuses were based on achievement of a broad variety of goals and included specific goals related to clinical development, research, financing/corporate development and employee retention. The selected goals were designed such that high rates of achievement overall required strong performances by all of our internal teams. Our 2023 corporate objectives, a statement regarding achievement, relative weight and achievement of each as of December 31, 2023 were as follows:

2023 Corporate Objectives

Total 126%

2023 was a very strong year for us as a whole. Our Research and Development teams performed especially strongly. Both teams achieved all of their 2023 goals, and the Research team surpassed its IND-enabling goal, by initiating IND-enabling activities for three programs rather than the two that were targeted. In addition to these Research and Development achievements, our Finance and Corporate Development teams were able to extend our funding into late 2025 by negotiating and executing the Gilead collaboration, which was a monumental transaction for our company and the future of our pipeline. In addition, our organization, with the assistance of the Human Resources team, retained all of our most important talent, which was critical to the progress of our pipeline and the execution of the Gilead collaboration.

After receiving and considering management’s analysis and recommendations, the Compensation Committee determined that the percentage achievement of the 2023 Company-wide performance goals was 126%. This determination of achievement for our 2023 corporate objectives was supported by the excellent performances of our Finance, Corporate Development and Research teams, as well as our successful retention of our critical talent, which met, and in some cases far exceeded, the 2023 goals.

In determining individual performance-based cash bonus payouts, the NEOs’ potential performance-based cash bonuses were weighted differently, depending on their respective areas of responsibility and contributions to our Company-wide goals.

Dr. Delaney’s individual performance was evaluated based on his successful leadership of our Research organization and the Research team’s outstanding year, which included: nomination of 5366 and 6250; (2) initiation of IND-enabling studies for three development candidates (5366, 6250 and 1179), exceeding the team’s goal of two; and advancement of our NNPI into the lead optimization stage.

Dr. White’s individual performance was evaluated based on her successful leadership of our CMC organization and the CMC team’s similarly outstanding year, which included formulation work for all of our development candidates advanced in 2023, including critical work on long-acting formulations for 5366.

Each of our employees, including our NEOs, is eligible for a target bonus, which is set as a percentage of annualized base salary. The Compensation Committee determines these target bonus percentages based on the range of target bonus percentages for similar positions in our peer group, and our Compensation Committee periodically reviews and evaluates our NEOs’ target bonus percentages as compared to our peers. The target bonus percentages for our NEOs are set forth in the table below. In January 2023, Mr. Okazaki’s target bonus percentage was increased from 55% to 60% in connection with his promotion to Chief Executive Officer (applied to his adjusted salary). The following table sets forth our NEOs’ 2023 target performance-based cash bonus amounts and actual performance-based cash bonuses earned.

Long-term Equity Incentive Awards

Our equity-based long-term incentive program is designed to align our employees’, including our NEOs’, long-term incentives with those of our stockholders. In approving annual equity awards, the Compensation Committee’s and the Board’s guiding principles are to create a program that is designed to:

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Motivate management to generate significant total stockholder return, as measured by sustained increases in our stock price,

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Incentivize and reward our NEOs for achieving multi-year strategic goals, and

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Attract, motivate and retain high caliber employees.

We believe that participation by our employees, including our NEOs, in our long-term equity incentive program is a critical factor in the achievement of long-term Company-wide goals and business objectives. In furtherance of these objectives, equity awards are a critical component of our compensation practices.

We believe that stock options provide meaningful incentives to employees, including our NEOs, to achieve increases in the value of our stock over time, because employees profit from stock options only if our stock price increases relative to the stock option’s exercise price. Though we no longer utilize RSU grants for our NEOs, we believe that RSUs are also effective tools to retain and motivate our non-NEO employees to achieve longer-term financial goals that we expect to lead to increased value to our stockholders while resulting in less dilution to our stockholders than stock options. In each case the interests of our employees, including our NEOs, and our stockholders are aligned; as our stock price increases, both our employees and our stockholders benefit. We impose a minimum vesting period of one year on all equity grants made to employees, including our NEOs.

Grants of annual equity awards made to our NEOs, other than those to our Chief Executive Officer, are recommended by the Chief Executive Officer, considering input from the Compensation Committee's independent compensation consultant, and approved by the Compensation Committee. Grants of equity awards made to our Chief Executive Officer are discussed and determined by the Compensation Committee, in consultation with the Compensation Committee's independent compensation consultant, without the Chief Executive Officer present at any time.

In 2023, based on analysis of the Compensation Committee’s independent compensation consultant, while most of our employees received our standard mix of stock options and time-based restricted stock units (RSUs), the Compensation Committee approved 2023 annual grants to our NEOs targeted at the 50 th percentile of our peer group as a percentage of then-outstanding shares through awards of 100% stock options. The Compensation Committee agreed that it was appropriate for our NEOs’ annual equity grants to be made entirely of stock options, given the potential upside in our stock price, as our stock was trading at $0.89 on the date of grant and the performance-based, at-risk nature of options. While our annual equity grants are typically targeted at the 50 th percentile of our peer group as a percentage of outstanding shares, as a result of the price at which our stock was trading, the actual grant date values were at or below the 25 th percentile of our peer group. Mr. Okazaki’s 2023 annual equity grant was targeted at the 75 th percentile of our peer group as a percentage of outstanding shares, with the additional stock options included to reward Mr. Okazaki’s promotion to Chief Executive Officer, as he did not receive any equity awards at the time of his promotion. Mr. Okazaki’s annual equity grant date value was also below the 25 th percentile of our peer group.

The Compensation Committee considers the value of existing long-term equity incentive awards, internal pay equity considerations and individual and Company-wide performance when determining the size of annual equity grants. We believe the applicable vesting criteria encourages long-term employment, while allowing our NEOs to realize compensation in line with the value that they have created for our stockholders. After considering these factors, in March 2023, our Compensation Committee approved the annual grants to our NEOs summarized in the table below. All share numbers have been equitably adjusted in connection with our February 2024 1-for-12 reverse stock split.

(1)

The reported amounts represent the grant date fair value of the award, computed in accordance with FASB ASC Topic 718 disregarding any estimated forfeitures related to service-based vesting; performance awards are valued based upon the probable outcome of the performance conditions. Assumptions used in the calculation of these amounts are included in Note 9 of the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023.

Other Compensation

In 2023, we maintained broad‑based benefits and perquisites that are provided to all eligible employees on the same terms, including 401(k) match, health insurance, life and disability insurance, dental insurance, sick leave and non-accrual vacation time.

Other Executive Compensation Policies

Sections 280G and 4999 of the Code

Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control that exceeds certain prescribed limits, and that we (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe because of the application of Sections 280G or 4999 of the Code.

Hedging and Pledging Policy

Under our Insider Trading Policy, all persons subject to the policy, including executive officers, directors, employees, consultants and contractors, are prohibited from engaging in the following transactions related to our securities:

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Short sales;

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Publicly traded options, including put options, call options or other derivative securities;

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Hedging and monetization transactions, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds; and

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Margin accounts and pledged securities.

Our Insider Trading Policy prohibits these types of transactions because there is both a heightened legal risk and the appearance of improper conduct if covered persons take part in transactions of this sort.

Compensation Risk Assessment

We believe that our executive compensation policies and programs do not encourage excessive or unnecessary risk taking. This is primarily because our compensation programs are designed to encourage our executive officers and other employees to focus on both short-term and long-term strategic goals. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

Clawback

In September 2023, the Board approved a clawback policy that went into effect on October 2, 2023. The clawback policy complies with both the SEC's final rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related Nasdaq listing standards.

Stock Ownership Guidelines

The Compensation Committee most recently discussed the implementation of stock ownership guidelines in December 2023. The Compensation Committee noted the volatile nature of stock prices in the biotech sector, as evidenced by the recent steep declines of our stock price, and the well documented, sector-wide weakness in the biotech market that began in early 2021 and remains ongoing. The Compensation Committee determined that it is not an appropriate time for us to adopt stock ownership guidelines. The Compensation Committee intends to review this topic on an annual basis, including reviewing the practices of our peers. In addition, we are regularly reviewing the holdings of our executive team to ensure there is sufficient alignment with our stockholders.